SEC Busts Gold-Mining Ponzi/Pyramid Scheme Targeting Spanish-Speaking Victims
The Securities and Exchange Commission filed civil fraud charges against a Massachusetts company and its principals and promoters, arguing the company was a massive Ponzi and Pyramid scheme that raised at least $15 million from primarily Spanish and Portuguese-speaking victims. DFRF Enterprises LLC, a Florida company, and DFRF Enterprises, LLC, a Florida company, along with Daniel Fernandes Rojo Filho, Wanderley M. Dalman, Gaspar C. Jesus, Eduardo N. Da Silva, Heriberto C. Perez Valdes, Jeffrey A. Feldman, and Romildo Da Cunha were charged with multiple violations of federal securities laws in a complaint that was filed today in Massachusetts federal court. The Commission is seeking injunctive relief, disgorgement of ill-gotten gains along with prejudgment interest, and civil monetary penalties.
According to the Commission's complaint, Daniel Fernandes Rojo Filho ("Filho") began pitching memberships in DFRF to victims in the Spanish and Portuguese-speaking communities in Massachusetts, Florida, and other areas throughout the world. In a sales pitch primarily made through internet videos, victims were told that DFRF owned more than 50 gold mines throughout Brazil and Africa (including reserves in Brazil alone valued at over $4 billion) that collectively produced 13-16 tons of gold monthly and realized a return of over 100% on each kilogram it produced. The sales pitch also claimed that DFRF used a credit line with a Swiss bank to triple its available funds, that DFRF donated 25% of its profits to African charities, and that investors could realize a 15% monthly return - an annual return of nearly 200%. Recently, the defendants claimed that DFRF was registered with the Commission.
DFRF used multiple methods to attract potential investors, including hosting a public event on a cruise ship in the Boston Harbor in October 2014. DFRF also provided incentives to investors and promoters that attracted additional investors to DFRF, including promised 10% referral bonuses as well as additional bonuses for investors that invested more than $10,000. Potential investors were promised that their investments were fully insured.
In early 2015, a newspaper published an article detailing a recent class action lawsuit filed against DFRF and Filho in a Massachusetts court. Ironically, Filho denied the allegations that DFRF was a fraudulent scheme and instead suggested that the plaintiffs had confused DFRF with TelexFree - a massive alleged Pyramid and Ponzi scheme that was also based in Massachusetts and which is the subject of multiple criminal and civil regulatory actions.
DFRF has also sought to attract investors with promises that its stock was set to become publicly-traded and that current investors would have the ability to covert their membership interests into stock options at approximately $15.00 per share. Filho later claimed that DFRF was already public, but that it would not begin trading until the conversion process was finished. Last month, Filho claimed that, while he was withholding the stock symbol for DFRF for investors' "protection," the "value" of its stock had already surpassed $64 per share.
However, according to the Commission,
There are no gold mines, no gold reserves, or no gold operations. DFRF bank documents indicate that none of the investors' money has been used to conduct gold mining, and DFRF has received no proceeds from gold mining operations.
Moreover, DFRF's claims about its gold production and reserves are easily disproven by referencing the U.S. Geological Survey. At the current market price of $3.77 million per metric ton, the combined gold reserves of Brazil and Mali are worth approximately $39 billion - much lower than the $1.4 trillion in reserves that DFRF claims to have. Nor has the Commission been able to find any evidence that DFRF spent any money on charitable activities in Africa or elsewhere. Instead, the Commission alleges that DFRF was able to pay the outsized returns it advertised through orchestrating a massive Ponzi and pyramid scheme that attracted significant attention after it began using internet videos to solicit investors. In addition to using investor funds for the payment of purported "returns," Filho is also accused of siphoning more than $6 million out of DFRF for a lavish lifestyle that included a fleet of luxury automobiles such as a 2014 Rolls Royce, a 2014 and 2014 Lamborghini, and a 2006 and 2012 Ferrari.
The Commission also alleges that DFRF paid more than $300,000 to Sanderley Rodrigues de Vasconcelos, who is also a defendant in the TelexFree enforcement action brought by the Commission last year.
A copy of the Commission's complaint is below: